Euro Slips after ECB Report Fails to Give Further Guidance on Future Hikes

[DailyFx]

Even though the Euro is continuing to lose value against the US dollar, it is still holding well near the 1.35 level. There was no economic data released overnight aside from the ECB monthly report. The tone of the report was the same as the tone that ECB President Trichet took at his press conference earlier this month.

The central bank still feels that interest rates are moderate and remain accommodative, which confirms that interest rates will be increased in June. However there were no clues as to what may happen beyond June and that disappointment triggered a wave of Euro selling that lasted into the US trading session. Interestingly enough, we are also beginning to hear some less hawkish commentary. ECB member Ordonez said today the recent rate hikes have been cooling lending growth in Spain while EU head Junker warned that should the Euro accelerate too much, the ECB and the Eurogroup may have to take action. Intervention is not likely a realistic option at this point because the same effect would be achieved if the ECB openly announced an end to rate hikes.